(Reuters) – Shares of Madrigal Pharmaceuticals jumped about 30% on Friday after its oral drug became the first treatment to win the health regulator’s nod for a fatty liver disease known as non-alcoholic steatohepatitis (NASH).
The agency’s approval comes as drug developers race to tap into a global market expected to surpass $16 billion by 2030, according to market research firm Vision Research Reports.
NASH, which was recently renamed metabolic dysfunction-associated steatohepatitis (MASH), causes an excess build-up of fat in the liver, leading to inflammation and fibrosis, or scarring, of the organ.
The disease affects about 1.5 million people in the United States, according to the company.
Canaccord Genuity analyst Edward Nash expects a quick adoption and strong acceptance of the drug, citing “a highly favorable safety profile with no significant red flags identified in past clinical trials”.
Madrigal’s drug, branded as Rezdiffra, has been approved for patients who have MASH with fibrosis, or scarring, that has progressed to stage 2 or 3 in severity.
The “near best-case label” of the drug that includes a broad patient population with no requirement of a liver biopsy for diagnosis of the disease in patients, was above expectations, said Thomas J. Smith, analyst at Leerink Partners.
The approval also boosted shares of other MASH drug developers, like Viking Therapeutics. Viking, whose experimental MASH drug, VK2809, is in mid-stage trial, rose 3.2% to $67.2 premarket.
“The absence of liver biopsy requirement in Rezdiffra’s label should buoy biotech stocks with exposure to MASH,” said William Blair analyst Andy Hsieh.
Shares of Madrigal Pharmaceuticals, which had a market capitalization of $4.85 billion as of its last closing price, have risen 5% so far this year.
(Reporting by Sriparna Roy and Pratik Jain in Bengaluru; Editing by Tasim Zahid)
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